There is no doubt that inbound marketing helps businesses generate revenue. According to Hubspot’s State of Inbound 2015, 3 out of 4 marketers list inbound marketing as their primary methodology. Furthermore, inbound marketing generates higher ROI across all industries and company sizes.
But here’s the problem. Although there is a virtual mountain of content on how to run inbound marketing and how successful inbound marketing is relative to outbound methods, there are very few resources on how businesses can see the success of their inbound marketing initiatives.
If I’m a business owner, I would acknowledge importance of marketing my business online, but I would be very hesitant to invest my hard-earned revenue in significant marketing initiatives until I knew that inbound marketing would work for my business. So as a business owner, how do I determine the success of my marketing?
Determining Inbound Marketing Success
Business 101—a business is successful if it is profitable. A business’s success can be judged on its profit margins, and although different industries will have different targets, we can all agree that the more profit, the better the business. That brings us to our first conclusion.
In order to create success for a business, inbound marketing must generate profit.
How does inbound marketing generate profit? By creating an amount of revenue that exceeds the cost of the inbound marketing spend. In other words, if a business spends $50,000 on marketing per year, that business would expect their marketing efforts to be responsible for more than $50,000 of revenue.
From this point emerges the primary challenge of inbound marketing reporting: How do businesses attribute inbound marketing dollars to revenue earned?
Enter Attribution Reports!
Inbound Marketing Attribution Reports
Attribution Reports are analytical attempts to tie revenue dollars back to specific marketing assets. Developing these reports allows marketers and business professionals to understand both the value and the role of each marketing asset. Furthermore, this data gives businesses and agencies the insights they need for future inbound marketing strategies.
Basic Attribution Models
There are several different methods that can be used to create an attribution model. Some of the simpler models are as follows:
First Touch Attribution
First Touch Attribution assigns all of the revenue to the first marketing asset a consumer touched in their sales cycle. This model makes the assumption that the most important marketing asset is the one that introduces a customer to your business.
For example, if a consumer found a company blog post, then interacted with company content on social media and then purchased a product, all of the revenue earned from the purchased product would be attributed to the company blog.
Last Touch Attribution
Last Touch Attribution is just the opposite. This methodology assumes that the last marketing asset a consumer interacts with is the most important content because that content “closed the sale.”
For example, if a consumer navigates to the company website, downloads a whitepaper, reads a blog, schedules a demo and then purchases a product, the Last Touch Attribution Model credits the demo with all of the revenue from the sale.
First/Last Touch Attribution
First/Last Touch Attribution recognizes the importance of both the first and last interactions and evenly splits revenue between the two. If a consumer reads a blog, then clicks on a social ad, then purchases a product, this model would evenly attribute the revenue of the sale to the blog and the social ad.
Time Decay Attribution
Time Decay Attribution distributes incremental revenue across every marketing channel the consumer touches, attributing the least revenue to the first touch, and then assigning increasing revenues to each marketing channel ending with the most revenue given to the last touch.
Which Attribution Model Is Best?
A cut-and-dry answer would be nice, but the answer really depends on the business. We suggest looking at your sales cycle and building a model based on what you know now about how your customer makes the decision to purchase your products or services.
You may find certain web pages, blog articles, online reviews and content offers play different roles in the sales cycle. One offer may be the initiator, while another may be the closer and still others may be facilitators that move the customer through the sales funnel.
It’s up to you to determine how important each of those steps is to your business. We recommend you focus your attribution model around your greatest marketing challenge. Here a couple of examples:
- If you get a lot of qualified traffic to your website, but very few of those visitors are becoming leads or customers, then your greatest marketing challenge is capturing customers online. You have plenty of visitors, but too many of them are “window-shoppers.” In this case, you may want to attribute more value to your last-touch content offers because those are the offers that are winning you business.
- If you get little traffic, but what little visitors you get convert at an unusually high rate, you may want to skew your attribution model more toward first-touch attribution. Your marketing challenge is increasing the number of quality website visitors, and in order to that, you will have to create more digital marketing assets that introduce people to your business online.
Regardless of the challenge, we recommend you attribute at least some revenue to each marketing asset touched in the Buyer Journey. If you attribute $0 to a marketing channel that engaged a consumer during their buyer’s journey, you are saying that marketing channel contributed 0% to their purchase decision. That may or may not be a correct assessment of the role of that particular marketing channel.
Mid-size and enterprise businesses that have a wealth of data at their fingertips may consider developing a proprietary algorithm to allocate revenue to various marketing channels. This approach works for high volume data and complex business cycles (some companies have sales cycles with as many as 300 steps).
One Final Caveat
Attribution reports can be really helpful for a business, but they can also be terribly misleading. In the modern age, thought leaders all across the Internet are encouraging businesses to take advantage of “big data” and mine insights from the wealth of information available. Unfortunately, for how much data is supposedly out there, a lot of businesses simply do not have the analytical tools or the data gathering processes in place to properly mine and manage the information necessary to make modern business decisions.
We strongly recommend putting the proper framework in place to make sure your website is tracking the right information and producing the insights your business needs to assess the efficacy of its marketing.
Need Inbound Marketing Analytics? We’ve Got the Chops
At Horton Group, we have 20 years experience in developing digital solutions for clients. We believe your website should work for you by attracting visitors, generating leads and creating customers. And that’s not enough. We believe you should be able to attach a real value to every marketing asset developed, so that you can have a clear understanding of the return on investment for your marketing efforts. If you believe that too, give us a call. 615.292.8642
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